Gold bars and granules. File photo: Reuters

London - Gold traded near a one-week low and headed for the first weekly loss since December on the outlook for the Federal Reserve to cut stimulus and on speculation physical demand may ease.

Palladium headed for its longest losing streak since October 2001.

Bullion dropped 1.8 percent yesterday, the most since December 19, reaching a one-week low of $1,238.17 an ounce.

The US economy expanded at a 3.2 percent pace in the fourth quarter, matching the median forecast in a Bloomberg poll, data showed yesterday.

Gold still beat a 1.1 percent gain this month for the Bloomberg Dollar Spot Index and a 1.6 percent advance in the Bloomberg US Treasury Bond Index.

Gold tumbled 28 percent last year, the most since 1981, as some investors lost faith in the metal as a store of value.

The Fed said January 29 it will trim monthly bond buying by $10 billion to $65 billion.

Lower prices that spurred physical demand helped gold rebound from a six-month low of $1,182.52 set December 31.

Chinese consumers traditionally increase gold purchases before the Lunar New Year holiday that starts today and lasts a week.

“Chinese demand has been one of the key factors behind gold’s strong performance this month,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report.

“The likelihood of seasonal demand waning next month would render gold vulnerable to deeper sell-offs, in case macro-economic developments in the US turn more favourable.”

Gold for immediate delivery fell 0.1 percent to $1,242.30 by 9:41 a.m. in London.

Prices slid 2.2 percent this week, the most since December 20 and narrowing the first monthly advance since August to 3 percent.

Bullion for April delivery was little changed at $1,242.20 on the Comex in New York, where futures trading volume was 43 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

Emerging Markets

Bullion gained earlier this week as a rout in emerging- market currencies boosted demand for the metal as a haven.

Still, holdings in gold-backed exchange-traded products are near the lowest since October 2009, data compiled by Bloomberg show.

Silver for immediate delivery gained 0.2 percent to $19.198 an ounce.

It reached $19.01 yesterday, the lowest this year.

Palladium fell 0.1 percent to $706.93 an ounce.

It fell to a one-month low of $704.75 and is headed for a ninth straight daily decline, the longest losing run since October 2001.

Platinum gained 0.1 percent to $1,384.08 an ounce, after earlier today reaching $1,377.25, the lowest since January 2.

Platinum mining in South Africa, which accounts for 70 percent of the world’s supply of the metal, has been curbed since the Association of Mineworkers and Construction Union called its members on strike on January 23 at Anglo American Platinum, Impala Platinum Holdings Ltd. and Lonmin Plc.

The National Union of Metalworkers of South Africa yesterday notified Anglo American about its plan to walk out from February 3.

Platinum prices have fallen partly on speculation the mining companies have built stockpiles to meet lost output.

Anglo American and Impala can continue to fulfill customers’ orders for six to eight weeks, spokesmen for the Johannesburg-based companies have said. - Bloomberg News